Corporates commonly issue bank cards to their employees, which offer them several benefits. However, it is extremely difficult for early-stage startups to avail corporate cards from banks, which seek a 110 percent deposit guarantee, a personal guarantee from the founders, and a huge amount of documentation and time.

This gap led Chinese VC Pei-fu Hsieh and Amit Jangir to start Karbon. The fintech startup, based out of Bengaluru and Shanghai, was founded at the end of 2019, and issues KarbonCard, a corporate card to startups.

The core team of Karbon

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Prior to starting KarbonCard, Pei worked with US-based VC fund Kleiner Perkins and Chinese fund 01VC, which focused on investments in India. He was earlier with McKinsey and also built from scratch and managed many ventures at Rocket Internet.

Pei had worked with Amit at 01VC, and they roped in Sunil Sinha, who brings decades of experience in the fintech industry and is now in charge of KarbonCards credit policy, card issuance, and customer services. Sunilearlier run his own SME lending company in India, and understands the nuts and bolts of running startups and lending.

The duo also enlisted Bo Li, who worked at Amazon and Tencent prior to Karbon.

He adds that the idea was suggested by many other startups. "Moreover, since we have worked in China earlier, and are beginning to see how Chinese investors are opening the gateways for Indian startups, we want to be an enabler that can seamlessly help both sides without any hiccups.

The card offers four key benefits:

However, the biggest challenge was convincing startups that a product like KarbonCard existed. Most services are catered to large enterprises with the ability to pay. Never before has a product that is entirely free of charge been built for startups. Thus, the biggest challenge lies in bringing the shift from a traditional banking mindset to nu-age banking that brings the interests of a startup to the forefront, Amit says.

Karbon doesnt charge fees of any kind at present. The card and the rewards across AWS, Hubspot, Segment, and the like are completely free for startups to use.The revenue model primarily revolves around taking a cut of MDR when the card is swiped at any merchant.

Karbon at present competes with the likes of HDFC, ICICI Bank, Citibank, and American Express. The team agrees that the biggest competitors are traditional banks, but adds that those arent in the business of serving startups.

They focus on the larger enterprises with steady revenue streams and significant assets.Startups are considered risky customers by banks; thats why its so difficult for startups to apply for corporate cards from banks, Amit says.

The market for cards is fast growing in India. According to a Reserve Bank of India report, the circulation of cards touched 48.9 million in May 2019 from 38.6 million in May 2018. There has been a 27 percent growth in business opportunities.

(Edited by Teja Lele Desai)

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Read more from the original source:
How this Chinese VC and Indian investor joined hands to build a fintech platform that assists startups in Beng - YourStory